NZD/USD plummets to 4-month lows, below 0.71 handle

The NZD/USD pair extended previous session's bearish break down below 200-day SMA and tumbled to four-month lows, below the 0.7100 handle.

The US Dollar continued gaining traction on Friday, supported by hopes for progress on the US tax reforms, and touched a seven-week high on Friday, closer to the 94.00 handle, which was eventually seen weighing heavily on the major. 

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Adding to this, the incoming US economic data, coupled with hawkish rhetoric from various FOMC members cemented December Fed rate hike expectations. The same is evident from a continuous upsurge in the US Treasury bond yields and further collaborated towards driving flows away from higher-yielding currencies - like the Kiwi.

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The pair's fall since early NA session on Thursday could also be attributed to some technical selling, following a decisive break below the very important 200-day SMA support near mid-0.7100s. Hence, a follow through weakness, led by additional long unwinding pressure, now seems a distinct possibility ahead of today's key event risk - NFP report.

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Technical levels to watch

A subsequent break below 0.7080 level is likely to accelerate the slide towards 0.7055-50 zone before the pair eventually aims towards testing the key 0.70 psychological mark.

On the flip side, recovery attempts back above the 0.7100 handle now seems to confront immediate resistance near 0.7120-25 zone ahead of an important support break-point, turned strong resistance near mid-0.7100s.